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Hey everyone,
A brand new episode of the CDG Podcast dropped this morning, featuring Marcello Sciarrino, Co-Owner at Island Auto Group.
— CDG
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Welcome to the Market Pulse—your cheatsheet to auto retail, built to help dealers price right, stock smart, and stay ahead.
May is tracking toward the strongest sales reading in over a year: The YoY gain is partly “flattered” by last year's tariff payback, which pulled an estimated 63K sales out of May 2025 into the months before it.
Affordability pressures are mounting: Monthly payments are hitting $810, nearly one in three trade-ins is underwater, and buyers are stretching to 84-month loans and leases just to make the numbers work.
And with that, dealers are doubling down on fixed ops and F&I: With front-end gross too volatile to rely on, dealers are investing in service capacity, tying F&I pay to VSC penetration, and tightening internal processes before a slower economy forces their hand.
(Source: JD Power / GlobalData May 2026 Forecast / iSeeCars)
May new-vehicle sales are trending up, but the average buyer is walking in with $810/mo payments and a trade that's underwater.
May retail sales are projected to reach 1,231,900 units, up 6.0% year-over-year, according to JD Power and GlobalData.
Worth noting, though: JD Power estimates roughly 63K sales were pulled forward into March and April of 2025 after the tariff-driven surge, leaving May artificially low.
So when you strip away the easy comparison, what's actually true right now is this:
Average transaction prices are flat ($46,023)
New-vehicle loan rates are down (6.59%, the lowest May reading in two years),
OEMs are spending more to move metal ($3,297 per vehicle, up 20.7%)
And buyers are still stretching further than ever just to get into a car ($810 average monthly payment, up 2.8%).
NOTE TO DEALERS:
The SAAR number tells us demand is stronger than some headlines suggest. However, 30.4% negative equity on trade-ins means roughly one in three customers walking in this month owes more than their car is worth.
That’s all the more reason to make sure your desk and your F&I office are communicating earlier in the deal than ever before.
Hybrids are taking share from EVs, and more buyers are leasing just to make the payment work.
Also happening right now, the hybrid share of retail new-vehicle sales has climbed to 16.3%.
That’s up 1.6% from a year ago, driven by more hybrid availability and elevated fuel costs (pictured below).
(iSeeCars data/custom analysis by CDG’s Joe Cecala)
EV share, meanwhile, has softened to 7.0%, down 1.2 points, largely because federal EV tax credits are gone.
At the same time: About 22.6% of buyers are opting to lease, up slightly from last year, because it's one of the few ways to put a manageable number on the window sticker without actually lowering the price.
And for buyers who are financing, 13.4% are now stretching to 84 months or longer to get there.
WHY IT MATTERS:
Fuel price conversations, longer loan terms, and recovering lease penetration are all symptoms of the same thing, aka buyers managing the total cost of ownership, not a one-time price.
That’s why a conversation on "here's what happens if your car gets totaled while you're still underwater" or "here's what a transmission replacement runs today" hits different right now.
Connecting the dots for the customer > them having to figure it out themselves.
A quick word from our partner
Flight to quality is accelerating
Buyer interest is diverging across brands and markets.
Luxury and top-tier import brands continue attracting premium demand, while other franchises face increasing scrutiny from buyers.
Presidio’s latest Q1 2026 Dealership M&A Market Update explores:
The divergence shaping dealership valuations.
Transaction activity.
And acquisition strategy across today’s market.
With front-end performance too volatile to rely on alone, dealers are shoring up fixed ops and internal processes so that a weak economy or stretched consumer doesn't have to mean poor satisfaction, unhappy employees, or broken workflows.
Here are some dos and don’ts worth considering:
Do: Invest in service capacity now, before the economy forces your hand.
Marcello Sciarrino, Co-Owner of Island Auto Group, is adding 70 to 100 service bays across his 20-store New York and New Jersey group over the next 12 months.
His reasoning: Fixed ops is the one part of the business that holds regardless of what the economy does.
Marcello Sciarrino
In practice: While other groups expanded aggressively through acquisitions at what he called unsustainable multiples, Sciarrino and his partners stayed focused internally through a new 60,000-square-foot Toyota showroom, upgraded equipment, and air-conditioned service facilities.
The goal, he said, was to build the environment [people] want to work in.
"Technicians are going to go where it's easiest for them to fix a car,” he said.
Do: Send a video MPI on every single repair order, and tie it directly to the pay plan.
Xavier Rivera, service director at Greenacres Nissan and I-95 Nissan, made video MPI mandatory across both stores and built it into advisor compensation, meaning advisors don't receive their 1% of gross unless the send rate hits 90% or higher.
“Once your team has bought in and they see the value, they're not going back,” he said.
Xavier Rivera
The result: Hours per RO jumped from 0.8 to 1.3 in three weeks. And both stores went from the bottom of their dealer group to first and third.
Do: Promote from within fixed ops and build a career path that technicians can actually see.
Spencer Nicholson, fixed ops Director at Stucky Automotive, runs fixed ops across nine brands in central Pennsylvania and recruits almost entirely from local career and technology school programs.
Nicholson’s POV: “You can go be a service advisor, you can be a parts manager, you can be a service manager. There's just so many routes you can go after you get that baseline and that foundation."
Spencer Nicholson
The target it feeds: 10% customer pay RO growth, year-over-year, every month.
Don’t: Keep a high-producing technician who's killing the culture.
Both Rivera and Nicholson were asked directly: if a technician is a production monster but a culture problem, do you keep them?
Neither hesitated…
“It's cancerous. That is definitely a big cancer for the whole department. You can coach them, you can train them as much as you can, but that's a big cancer you got to take out,” Rivera said.
Rivera picked up a line at NCM school that stuck with him and has shaped how he runs both stores since:
"If it's not a written process, it's just an idea."
I bring this up because most of the fixes dealers are looking for in fixed ops (retention, hours per RO, technician pipeline) already exist as ideas in someone's head.
Profitability, though, hinges on writing them down, holding people to them, and reviewing them when they stop working.
The latest updates to the CDG Buy/Sell Tracker.
